by igorvolseo » Thu Aug 19, 2010 12:31 pm
hi
i want to know what is the difference between group and individual insurance?
i want to know what is the difference between group and individual insurance?
Posted: Tue Aug 24, 2010 09:25 am Post Subject:
Here we have a nice explanation for you-
http://www.ampminsure.org/health-grp-indiv.html
I'm sure it would help clarify a lot of your doubts.
Posted: Thu Aug 26, 2010 07:23 am Post Subject:
Risk get shared between the members of a group health plan. As a result of this, rates are bound to be cheaper than the individual policies. If one of the members file a major claim, then it perhaps affects all of them.
Posted: Thu Aug 26, 2010 03:42 pm Post Subject:
In theory that is how it would work. However the reality is this. If you are healthy and do not need maternity coverage than a individual plan with a major insurance company is always less expensive now and later.
The group plans are heavily regulated by HIPPA and they cover maternity and pre-existing conditions.They also allow the employer to hire a new employee and once the waiting period is satisfied they come onto the plan with no underwriting. There is also a yearly open enrollment period when existing employees or dependents can enter the plan, again with out any underwriting. These provisions are unique to group plans and why group plan are always more expensive than individual.
There is not one major individual insurance company that will cancel you or single you out if you get real sick. This is also a common misunderstanding when looking at group / individual.
There is a need for both type plans but if again if you are healthy and do not need maternity than an individual plan from a major insurance carriers is the way to go.
Posted: Sun Aug 29, 2010 01:45 pm Post Subject:
The group plans are heavily regulated by HIPPA . . . . These provisions are unique to group plans and why group plan are always more expensive than individual.
and laterif you are healthy and do not need maternity than an individual plan from a major insurance carriers is the way to go.
HIPAA does not "regulate" health insurance at all, group or individual. ERISA is the federal law that governs most aspects of group insurance. HIPAA does prescribe certain things about group health insurance, such as the ability to use prior creditable coverage to avoid the preexisting condition exclusions that may accompany entry into a new group health plan when one changes employment. (As an aside, HIPAA does not do the one thing that we were led to believe it would when sold to the American public in the 1990s by Bill Clinton: guarantee a person immediate coverage under a new employer's group health plan when changing jobs. We were told, "You'll be able to take your health insurance with you to a new job." Unfortunately, one still must wait out the new employer's probationary period, usually covering the gap with an continuation of benefits under COBRA.)
Although group health insurance is not inexpensive, it is always LESS EXPENSIVE than an individual plan that provides the exact same level of benefits, not more expensive. This is due precisely to the lack of individual underwriting in group insurance. A group policy can be more expensive than an individual policy because the group policy covers far more things, has a higher benefit level, or both, compared to a basic individual policy. As always, one must be making an "apples to apples" comparison when making such broad assertions about the cost of insurance (life, health, auto, home, commercial, doesn't matter).
While it is true that most individual health insurance plans do not cover maternity, this is not the point on which one would choose a group health plan over an individual health plan. A person whose employer does not offer a group health insurance plan cannot simply walk up to an insurance company and say, "My wife and I need a group health insurance policy with maternity coverage in case she gets pregnant." That person would only be eligible for an individual policy (albeit one that covers two or more persons).
Finally,
There is not one major individual insurance company that will cancel you or single you out if you get real sick.
This is not entirely true either. All health insurance companies DO have the legal right to non-renew a health insurance policy at the end of the policy period, unless that policy is issued as "guaranteed renewable". While many forms of "disability" insurance policies are issued guaranteed renewable, such as Medicare Supplement, Medicare Advantage, and Long Term Care, I know of no such health insurance policies, group or individual.
Many group policies have been "non-renewed" precisely because the group suffered heavy losses in a single year, as has been the case with some individual insurance policies. This is where HIPAA may prove to be valuable -- since "creditable coverage" has the ability to eliminate exclusions for preexisting conditions in a new policy (including a replacement group policy).
What insurance companies are NOT SUPPOSED to do is issue a policy without truly completing underwriting, wait for a big claim to come in, and then conduct some new underwriting, looking specifically for any "material misrepresentations" that could have allowed the company to refuse to issue the policy in the first place.
The practice is called "postclaims underwriting" and is unlawful in all states. Sometimes known as "recission", most insurance laws allow insurers to cancel coverage if a material misrepresentation is found in an application for insurance. Health insurers have "cut off their noses to spite their faces" when it comes to invoking this "contractual right", and rescinded policies without proper cause -- calling any misstatement in an application "material" when in fact it was not.
Especially here in California, almost all health insurance companies have been fined, in some instances very heavily, for their postclaims underwriting faux pauxs. One company, currently in negotiations with the CDI and DMHC, is facing a potential $1,000,000,000,000+ fine for more than 10,000 "unfair business practices" violations that were uncovered in response to a large number of recission complaints. Each "willful" act is worth a $10,000
fine.
California's legislature responded to the problem, finally, in 2009, by now requiring all health insurance policies to be "incontestable" after the policy has been in force for 24 consecutive months, effective January 1, 2010. Prior to this, there was no time limitation on an insurer that prohibited lawful recissions due to genuine material misrepresentations, although most policy recissions happened within the first year of coverage.
Posted: Sun Aug 29, 2010 08:27 pm Post Subject:
Max Herr,
Look, prior to 1996 group plans ( outside of the world of CA anyway) had the option of not covering maternity for groups under 15 ee's, there was no such thing as " open enrollment period", no such thing as a " qualifying event", there was no such thing as " prior credible coverage" either, some plans were even able to do medical underwiting on timely entrants into the plan. I remember this as HIPPA but if you say it was Erisa than fine, I really do not think any non-insurance person reading this cares.
You stated that group plans do not do individual underwriting and that is why they are less expensive than individual plans... Maybe that is the case in California but in the states that we market in they all do individual underwriting on the front end to set the initial rates. In Arizona the carriers can increase the base rate by as much as 400%, in Georgia & Tennessee it is 66% after they do individual underwriting on the front end. I am referring to group plans in the 2-50 life market place.
Now, after a group is implemented all timely new employees, open enrollment employees or dependents and employees coming onto the plan due to a " qualifying " event are not individually underwritten.. Because small to medium size business's tend to have a rather high turnover the group a carrier underwrites today is not the same group they have 18 to 24 months down the road. As a result of this you see group carriers increasing the rates at renewal by 25% or more. This is why employers change group health insurance carriers on average every 3 years. If they do not then they almost always increase the deductible / out of pocket to offset the cost increase.
As far as individual coverage vs. group. Unless you market and teach insurance in states other than California your view is jaded... You write as though you are an expert and maybe you are, but maybe that is only the case for consumers in California. I have never sold anything to anyone in California, nor am I contracted with any carriers there. I am not aware of CA insurance regulations. I do market in AZ,GA,TN,NC, and SC though. I should have made this clear in my earlier post. It would also help if people asking questions on this forum would indicate where they reside.
The individual market place has grown exponentially since 1996 due to Erisa/ HIPPA... As group insurance cost have skyrocketed and employers have passed this cost onto there employees the " healthy" employees have gone out an purchased individual health insurance and that has left the group insurance market with fewer healthy participants.
For all the states that we market in it is true that if a consumer does not need maternity, does not have serious prexisting conditions then an individual plan is the best way to go. It will cost less and they will have a plan that is privately owned and is not connected to a relationship with an employer or subject to change at renewal by the employer. All the states we market in mandate that " complications of maternity" are a covered expense on the individual health insurance plan. Many of our clients have set up a prepayment plan with the OBGYN and the hospital ( about 6000.00) to cover the normal maternity benefits and then they have there individual plan to cover the " complications" if they occur.
Having said that, I am talking about buying the individual policy from a major insurance company ie: BCBSGA, BCBSAZ, Kaiser GA, Coventry GA, not generic type companies that tend to pay salespeople unbelievably high commission to market there plans, that charge monthly premiums that are below cost and do a poor job on underwriting. Then when claims and expenses exceed premiums they cancel all policies.. Now there are exceptions to this in that in your state of California even the " name brand" carriers have done these type things. But I think your local state specifice economic environment has more to do with what happens there then anything else.
You also disagreed with my statement that a major insurance company will not cancel you if you get sick or single you out for a rate increase.
I have been selling health insurance for 23 years, I do not teach insurance or help new prospective agents complete ther pre-licensing study course. Is this what you mean when you say you teach insurance? We have a good mix of group insurance and individual insurance. I have never had one of our clients cancelled or singled out due to there claims history (incurred or expected) by any insurance company we represent and in the state we market.
I am aware of many consumers though that have been singled out and cancelled by certain insurance companies over the years. Golde Rule is the biggest offender. In the late 1980's an early 1990's they did this at least 5-6 times.They would issue policies at below cost and then exit the marketplace and leave all policyholders "SOL". Many agents might not be aware of this if they first became licensed in 1997.
California is very unique in many ways and what hapens in your state does not really reflect what happens in other states. By this I mean the problems you have had with Kaiser & Blue Cross, Blue Shield we have never experienced in other states.
There seems to be two main problems with health insurance. Cost and access. There are many others but theses are the two main issues.
If the majority of the country who have private insurance( as opposed to government ie: medicaid, medicare) continued to work for an employer for many years as there parents did than haveing group insurance would be the best way to get access to the insurance. However, most people do not work for the same employer for 20-30 years anymore and find themselves with out insurance or in between insurance plans due to a employement situation. This makes a great case for unlimited cobra periods or privately held individual health insurance just like our auto, homeowners and life insurance.
Now that leaves cost. If all of us purchased health insurance to cover medical care that was financially devastating than the insurance cost would be much less.
Instead we buy health insurance with office visit copays and prescription copays to cover medical care that is not really going to be financially devastating to most people. The copay type plans generally encourage over utilization cause consumers think they can go to the doctor for a modest copay of 20.00 or 30.00 and the insurance company will just pay the rest.
The insurance companies then use this utilization to justify huge rate increases. Imagine the cost of an auto policy if it coverd with a small copay such things as tires, oil changes, belts, hoses, brakes and windshield wipers, not to mentioned how much more often our cars would have these things replaced thinking the insurance company was just paying the bill. Imagine what the average oil change facility would charge for an oil cahnge if they new that all ther clients had to pay was say 5.00 and a multibillion dollar insurance company was paying the balance...
We need a huge coast to coast insurance market place so there would be much more competiton among the carriers.
All consumers of health insurance should be able to buy there insurance with " pre- tax" money. As you know only consumer purchasing group insurance or those of us that are self employed and purchase an individual policy can buy with pre-tax money. All consumers that are compensated via a W-2 can not purchase a individual policy with " pre-tax" money.
The forum user who started this thread appears to be from New Jersey and although I do not market there I am aware that the state specific laws in New Jersey not unlike California make it very expensive for the carriers to do business in these type states. Consequently health insurance is very expensive for the citizens in these states. If the forum user in New Jersey could make a personal choice to buy a policy from a carrier in another state than perhaps the issue that generated his/her question would not be present.
Regards,
Todd Oxley
Oxley Insurance Group LLC
623-551-8671
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